CMC to build $1bn facility in Harrismith, South Africa

ABR Staff Writer
Published 21 June 2011

China-based vehicle manufacturer China Motor Corporation (CMC) plans to build a $1bn vehicle manufacturing plant outside Harrismith, in South Africa's Free State province.


The company said that the Harrismith factory will produce the Ses'buyile 16-seater minibus and the Plutus range of single and double-cab pick-ups.

The new manufacturing facility is expected to create around 2,500 jobs and eventually build 50 000 vehicles a year to qualify for automotive production and development programme incentives.

CMC director Imran Moola was quoted by businessday as saying that while there would be a technology transfer from the company in China, the local operation will be 100% South African.

"We can get Chinese finance if we want, but we want SA-driven investment, we want to maintain control," Moola said.

"Financial services giant Ernst & Young was handling the raising of capital from different institutions and $1bn was the minimum investment.

The Chinese vehicle manufacturer expects to break ground on the new facility at the end of this year.


http://manufacturing.automotive-business-review.com/news/cmc-to-build-1bn-facility-in-harrismith-south-africa-210611

Harrismith factory plans ‘wonderful’

ALEXANDER PARKER
Published: 2011/06/22 07:45:17 AM


THE proposed China Motor Corporation (CMC) car factory to be built outside Harrismith could not have come at a better time for the town.

Free State Development Corporation CEO Thabo Makweya yesterday described the proposed investment as "huge news" and "a wonderful opportunity" for the town.

Harrismith, described by officials as a dying town, faces chronic unemployment and was on the verge of being cut off from the country’s main traffic route between Johannesburg and Durban by a mooted alternative highway.

CMC intends to build a $1bn vehicle plant that would create at least 2500 jobs and potentially spur downstream industries, broadening Harrismith’s economic prospects beyond being mainly a halfway stop for truckers. CMC plans to build up to 50000 16-seater minibus taxis similar to the Toyota Ses’fikile.

Mr Makweya said the area was sitting on a youth employment "time bomb" and the Free State Development Corporation was working hard on "our mandate to look for economic answers in dying towns".

He said discussions with parties including the Department of Trade and Industry , CMC itself , the Industrial Development Corporation and Harrismith’s Maluti-A-Phofung municipality were ongoing.

The "knock-on effects" and benefits for related industries in the area would be enormous, he said. "As the Free State Development Corporation we own a lot of land, which we want to use to create jobs, and we’re working with the municipality to work out some electricity incentives," Mr Makweya said.

Unemployment in the area was bad , he said. "The Free State has now overtaken the Northern Cape. Official unemployment is now 29%, the vast majority being the youth."


CMC director Imran Moola said yesterday that the company was "very confident" it would raise the $1bn that it wants to invest in the Harrismith project. Mr Moola said the company wanted to be up and running 24 months after starting to build, and that the full $1bn investment would be spent in that period.

On Monday Mr Moola said he wanted to break ground by the end of the year. "It’s a greenfield project. We’re starting from scratch with this." He said the plan was to use the locally made CMC products as "an entry into the market", and that the company would then move to develop its own products. "We want to create a South African car company."

He said he came from a family of successful entrepreneurs and that there would be family investment in the project.

parkera@bdfm.co.za



http://www.businessday.co.za/articles/Content.aspx?id=146476

Excellent news :cheers:

not sure about this, build a car factory in the middle of no where , far away form your supply chain, far away form your customers (urban areas) in a town with limited or no large flat land. WHY?

Whats the catch?

I smell something fishy.

If you were an investor about to spend R7 billion (seems over top) and you had half a brain cell, you wouldedt be going to Harrismith. Im sure Coega, Richards Bay, Saldhana etc would all offer much better deals and gaurenteed power supply and large flat land.
The simple fact they you would want to position your factory away form your suppliers is the biggest piece of evidence that this is another Soweto to Joburg Monorail .

There is an IDZ in Harrismith as part of governments plans to stop the collapse of small towns where in many cases the jobs are non exsistant.

still doenst make sense spending millions shipping in from hundreds of miles away your parts and then spending millions to ship the finnished product back to where your parts came from.

Never gonna happen in Harrismith but maybe somewhere logical

^^tax incentives...

still doenst make sense spending millions shipping in from hundreds of miles away your parts and then spending millions to ship the finnished product back to where your parts came from.

Never gonna happen in Harrismith but maybe somewhere logical

What about all the plants in Pretoria then? A very large percentage come in from Durban harbour, or from component manufacturers in Durban - these then get sent to PTA. They then have to ship their cars to Durban to send overseas, or send on trucks all over SA. They are basically doing what you alude to above.

Harrismith is bang in the middle of Durban and Gauteng. Parts from Durban can get to Harrismith easily.

If things are not incentivised and IDZ type activity is not encouraged in these smaller towns then the country as a whole will suffer, more people will leave them for Gauteng, Durban etc and the service levels in those areas will be stretched. The economy is already to tightly centre in 3 areas, this leads to imbalances. More work needs to be done to spread investments like this all over the country

BMW and others have been in Brits/Pretoria for donkeys. would they go there now if they had the choice, probably not. Obviously most motor industries should be concentrated near ports to make shipping in and out easier (Slummies with Mercedes, Utenhuig with VW and Durban with Toyota). Brits is the odd one out possibly for historical political reasons.

Should this happen great, but reality will dawn soon enough and no one is going to pump R7bil into Harrismith, its a one horse town and that horse is long gone. Doesnt matter that the government whats to help little shitty town survive ,its about buisness and this doent make business sense to me. Its like the international raceway at Welkom? good thing to have , wrong town to have it in

^^ yes but government has a clearly stated objective of making these towns survive with the creation of IDZ's. Tax incentives etc come into play then and that alters the business sense something makes.

Would you rather they were all left to rot away? The 3 main cities over run and turned into mega cities with populations of over 10million each? Tottaly crowded and lacking in services? because that will be the reality if distribution of economic activity does not take place.

^^ yes but government has a clearly stated objective of making these towns survive with the creation of IDZ's. Tax incentives etc come into play then and that alters the business sense something makes.

Would you rather they were all left to rot away? The 3 main cities over run and turned into mega cities with populations of over 10million each? Tottaly crowded and lacking in services? because that will be the reality if distribution of economic activity does not take place.

Harrismith is a farming town at best. Qwa Qwa (on the road to Bethlehem) was the IDZ of its day and attracted about 3 factories, isolated for everything and everywhere.
Yes support town but be realistic about it. Its like the international airport at Bisho,everyone laughed there arse off about it as it made no sence, liek wise with this.

Support Harrismith but haveing a Agriculture IDZ. Theres shit loads of water and great farming land.

This factory should be at Coega cos thats the governments real problem child, not one horse farming communities that have been stagnent for 50 years. its nothing new Harrismith has always be a dump, like Newcastle and 100 other South African and global towns in developing countries.

Good initiative yes with the right vehicle (scus the pun)

^^you do have a knack for cutting through the bullsh*t and zoning in, but still I'm for economic diffusion. Plus I'm sure there is a viable business case for locating it between JHB and DBN...

im with sa boy on this. the whole thing just doesnt make sense.
setting out dates when finance hasnt been secured and so many other reasons
from engineering news.
Reports on the establishment of a $1-billion Harrismith plant to assemble Chinese vehicles were met with disbelief by panelists at a Future Group automotive industry breakfast in Johannesburg on Friday morning.

Former McCarthy Group CEO Brand Pretorius said it was “highly unlikely in the short to medium term that a Chinese manufacturer would come to South Africa to establish a manufacturing facility”.

He said Chinese brands currently still lacked the local sales volumes necessary to reach the 50 000 units a year production threshold at which government incentives kicked in under the Automotive Production Development Programme.

The McCarthy group imports Chinese vehicles, such as the Chery brand, through a joint venture with the Imperial group.

Pretorius added that China still had 150-million unemployed people, and that the Asian giant’s “religion is economic growth. My opinion is that they will protect their manufacturing base. The argument to continue manufacturing 99% of vehicles for worldwide consumption in China is very compelling. They have the economies of scale”.

Pretorius said he was not condemning the possible development, but added that he had to consider “the real world. It is not impossible, but improbable”.

Associated Motor Holdings (AMH) CEO Manny de Canha reacted with the same level of skepticism, noting that the development was “virtually impossible”.

“Chinese brands take 10, 15 years to establish themselves. If it will happen, it will take 20 years”.

AMH is owned by Imperial.

East Rand based Calibra Motor Corporation (CMC) announced earlier this month that it aimed to break ground on a greenfields vehicle assembly plant in the Free State by the end of this year, or early next year, with the first vehicle anticipated to roll off the assembly line in 2015.

CMC imports a variety of Chinese vehicle brand into South Africa. The current biggest sellers are 14- and 16-seater minibuses for the local taxi market.

The company imports and sells Xiamen King Long buses, coaches and minibuses, Huanghai bakkies, Lifan passenger cars, Foton medium trucks, and SinoTruck heavy-duty trucks.

The company noted that the Harrismith plant, set to produce taxis and bakkies, was to be a South African plant, driven and funded by South African born individuals.

double post

i rest my case

Doesnt make sense at all to put something up in Harrismith especially since SANRAL plans on re-routing the N3 away from it.